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Understanding Jamaica's Logistics Hub - Part 2

Understanding Jamaica's Logistics Hub - Part 2

Marcia Forbes PhD

Connecting Suppliers to Customers

PROFESSOR Gordon Shirley, head honcho at the Port Authority of Jamaica, recently told us that the Jamaica Logistics Hub Initiative was designed to “leverage Jamaica’s strategic location to become an integral link in the global supply chain.”

But not everyone will understand what ‘global supply chain’ means.

Wikipedia defines a supply chain as “a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.”

Note that supply chain involves not just products but services as well, so it is not only about manufacturing. There is also room for service providers like those who operate call centres, one of the basic services included under the umbrella of Business Process Outsourcing, and an area in which Jamaica has developed some expertise.

So then, by way of the logistics hub and its supporting initiatives such as the establishment of Special Economic Zones (SEZs), Jamaica wants to become a player in this worldwide process of connecting those who produce with those who consume/use.

I will come back to the SEZs but first let me highlight what Professor Shirley described as the four immediate projects being undertaken in relation to the Jamaica Logistics Hub Initiative.

Four Immediate Projects

1)     Prepare the Kingston Harbour channel (the area between the Harbour and Port Royal) to accommodate larger ships. This will be done in two phases. A specific date for the completion of phase one was not stated.

2)     Attract an international port operator who will be offered a 30-year contract. Shirley indicated that a Request for Proposal (RFP) has been issued to three pre-qualified bidders. Singapore is one of these three. The Port Authority head did not give a specific deadline for the conclusion of this selection process. He only noted that it is expected to be completed in 2014.

3)     Implement a Port Community System to serve as a one-stop-shop and get rid of the bottlenecks associated with doing business in Jamaica. This Port Community System will include integral agencies, services and facilities such as Customs, Brokers/Freight Forwarders, Regulatory and Trade Agencies as well as a Container Depot.

Shirley indicated that the RFP for this Port Community System is already out and that companies from France and the Netherlands are preparing responses to the RFP. My understanding is that selection will be made by mid-2014 and that this system will be implemented within the next two years. Of note is that Jamaica will have to do a tremendous amount of work in terms of instituting required policies and legislations to make this system work smoothly.

4)     Establish the CHEC Logistics Park on the Portland Bight. This revelation seemed to confirm that it’s a done deal with the acquisition of Goat Islands by the Chinese. CHEC stands for China Harbour Engineering Company. The government, however, has not yet informed the nation that it has signed off with CHEC regarding setting up a Logistics Park/Hub on the Goat Islands.

The Portland Bight Protected Area

Of note is that the Goat Islands are within the Portland Bight Protected Area, an area established by the Government of Jamaica in 1999 as worthy of very special protection in view of its value in helping to maintain a balanced ecological environment.

Among other things, the Portland Bight Protected Area is home to coral reefs, mangroves, endemic species and sea-grass beds that serve as nurseries for breeding a variety of fish and shellfish. Environmentalists argue that situating a logistics park/hub in this area will, among other negatives, ruin the ecological balance and end up with starving fisher-families who make a living from within the area of the Portland Bight.

Jobs, Jobs, Jobs

Shirley’s PowerPoint presentation highlights a potential benefit of this CHEC Logistics Park to Jamaica as the “generation of 10,000 permanent jobs.” In the same section it notes one of Jamaica’s advantages to CHEC as having an “established and fair system of granting visas and permits for non-nationals with special expertise.” The rub of this particular advantage is what gets defined as ‘special expertise’.

Jamaicans are concerned that in addition to environmental degradation, with possible flooding of surrounding land mass and losses to fisher-folks and their families as a result of situating a Logistics Park within the Portland Bight, there will be no meaningful job creation. They fear that the Chinese will bring many of their nationals, not only those with ‘special expertise’ and that the jobs of which Professor Shirley speaks may never really materialize.

Trust Deficit

There has been severe erosion of trust between the government and the people of Jamaica regarding discussions and possible sign off with the Chinese about building a logistics hub on Goat Islands. It is time for the government to clearly lay out its decisions and to state how and why these decisions have been made.

Accusing environmentalists of being against the Jamaica Logistics Hub Initiative is disingenuous. Their issues and concerns surround the use of Goat islands, not all logistics hub-related initiatives. The Jamaica Environmental Trust (JET) has threatened legal action if refusal by the Port Authority of Jamaica to supply JET with information (per its request made under the Access to Information – ATI) is upheld by the ATI Appeals Tribunal.

Special Economic Zones

Types of SEZs

An important aspect of the Jamaica Logistics Hub initiative is the proposed SEZs mentioned earlier. Special Economic Zones take many forms including Free Trade Zones, Industrial Estates and Export Processing Zones. These zones are to be established under unique economic regulations and with privileges that are designed mainly to attract foreign direct investments to Jamaica.

Parishes to Benefit

The plan is to create at least thirteen (13) such SEZs spread across various parishes in a manner that will create employment and facilitate development. The parish of Clarendon is to host SEZs at Vernamfield and Jackson Bay while St. Catherine will benefit from the Caymanas Economic Zone, an SEZ at Fort Augusta and one at Port Esquivel. Cow Bay in St. Thomas and Luana in St. Elizabeth are also to benefit from SEZs.

Although at least five SEZs will be located in the corporate area, there is clear evidence that rural parishes have been included. Of note though is the need for sea, air or road access by these SEZs. Except for Vernamfield and Caymanas, a look at where the SEZs are to be established in Jamaica shows that they are pretty much along the coast line with easy access to a port.

Clustering Businesses

SEZs allow clustering of similar businesses. The clustering of Business Process Outsourcing is one example. Already in Jamaica we see this type of approach being used at the Montego Bay Freezone which houses a number of call centre operations. Some SEZs will allow manufacturers to add value to goods which pass through the Hub as well as allow these zones to engage in their own forms of manufacturing.

Next Steps

Some critical next steps for the Government of Jamaica will include:

1)     A joined-up approach to a Communication Plan for informing its citizenry about the Jamaica Logistics Hub initiative in a timely, transparent, thoughtful, thought-provoking and respectful manner.

2)     Clear statements regarding specific timelines for achieving the various aspects of the Logistics Hub initiative.

Some critical next steps for the people of Jamaica will include each of us taking an interest in understanding what the Jamaica Logistics Hub Initiative is all about and how each of us can benefit. Each one can teach one and share what we know as we work to put Jamaica and her people on a path of progress.

February 7, 2014